CARTELS offering cash upfront to cotton farmers producing the crop under contract with state-run Cottco Holdings have triggered a side-marketing fiasco that has unsettled executives at the company, the Zimbabwe Independent can reveal.
The merchants are reportedly offering US$0,05 less than what Cottco is paying. The cotton company is paying US$0,40 per kg for Grade D and US$0,46 for Grade A.
According to Munyaradzi Chikasha, chief operating officer at Cottco, some farmers have been attracted to the cash, and are engaging in side-marketing.
“There is the issue of side-marketing owing to the late payments of farmers due to the liquidity in the banks. Farmers are selling their produce to merchants offering US$0,05 lower than what Cottco is offering. The farmers are attracted to this hard cash component,” Chikasha said.
Cottco pays farmers within a few weeks of delivery, but some farmers have raised complaints saying they wait for months to receive their payments.
“We have to address our challenges first, then we talk about side-marketing,” Chikasha said.
Side-marketing almost led to the demise of the cotton industry in 2013 after private merchants stopped financing farmers because of poor debt recovery.
In 2014, output dropped to 28 000 tonnes, the lowest in nearly two decades.
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The government intervened by providing farmers with free inputs under a scheme known as the Presidential Free Inputs programme.
According to reports, farmers in Hwange and Binga districts were selling Presidential scheme inputs provided under the Intwasa/Pfumvudza, citing economic hardships.
Newly appointed Cottco chief executive officer Priscilla Mutembwa said side-marketing and side-selling of inputs were an albatross to cotton production growth.
“When we look at the amount of inputs that were distributed for cotton, we should have been talking about 180 000 tonnes, not 90 000 that we obtained,” Mutembwa said.
“The market share based on inputs Cottco should be 90%, this shows the elements of side-marketing, which is mostly our fault because we are not paying farmers on time and we need to fix that.
“Some people who benefit from the inputs are not using the inputs and we will do follow-ups. I am grateful to the loyal farmers that still delivered to us when we didn’t have the funding,” she said.
